Among such major international centers specializing in gold trading as London, New York, Zurich, Dubai is in a special place. According to statistics, more than 20% of the trade volume falls in this city. Successfully functioning Gold and Diamond exchanges make it possible to conclude futures contracts.
Minerals for processing are imported to the UAE, including from African countries and Asia. It is processed at factories where spectacular jewelry and other products are made for retail sale. As for the international arena, the number of participants engaged in gold business in Dubai is constantly increasing. They need to have legal registration for taking part in it.
As for the export of gold, it is closely related to its market price. When metal value increases, its export grows. That allows businessmen to gain the maximum profit.
An overview of the gold business in the UAE
Due to the special approach to the organization of trade and the setting of one of the highest prices for gold, this type of business is rightfully considered quite gainful. Investing in gold becomes very profitable. However, the business is under the supervision of the Dubai Governing Body, which provides all the necessary certificates. There are 10 factories successfully operating in the city, which process precious metals. The active retail trade of unique jewelry attracts tourists from all over the world.
Metal is delivered to Dubai from different regions of Africa, where there is an airport. Its transportation is often entrusted to couriers who can deliver from 2-20 kg of gold. Many African capitals have direct flights to the UAE. The flight lasts less than 5 hours, which facilitates the transportation of gold.
Business Opportunities in Dubai Gold Industry
The created favorable conditions for infrastructure play an important role. A suitable platform in the gold mining business is the DMCC free trade zone. You need to use operational elements, thanks to which the coordination and management of processes will take place. They will help to carry out trading successfully.
The appearance of a multidisciplinary commodity and raw materials center (DMCC) took place 21 years ago. The main purpose of this platform is to facilitate the terms of trade in commodities. Companies that do business in this sector have a number of advantages. The main ones are considered to be no corporate tax, a wide selection of real estate for conducting trading activities and assistance in logistics.
The best support for entrepreneurs who want to succeed in this area is considered to be the creation of the Dubai Gold and Diamond Park. Everything necessary for the production and trade of precious metals is concentrated in this area. It presents the most important tool for business in any sector – the product value chain.
Exchange and Procurement
There is no work on the exploration of gold and its extraction for commercial purposes on the territory of the UAE. It is known that precious metals are actively exported from African territories and America for this purpose.
One of the unspoken conditions that famous companies are following is the strategy of ethical search for suppliers. It establishes a restriction on the purchase of metal in areas with unfavorable economic or political conditions. Business owners will not cooperate with suppliers who support illegal operations. Many projects are currently under development. However, companies such as DGCG and MC free zone enterprises are already using the strategy of ethical selection of precious metals sellers.
According to statistics, the number of enterprises that submit a request for a certificate increases annually. The document confirms the ethical use of gold. It is interesting to note that in 2014, imports of precious metal products accounted for about 14% of the total.
A large number of enterprises use modern technologies for processing precious metals. They are represented by both international and domestic companies that purchase gold from different suppliers in Dubai or in other countries. Advanced technologies make it possible to achieve operational efficiency. As a rule, a large number of interested parties participate in logistics processes. Among them: manufacturers, wholesalers, retail representatives, distributors.
Investments and Funding
It is hard to dispute the fact that one of the most profitable investment tools is a contribution to gold or other precious metals. In addition to buying gold in the form of bars or jewelry, investing in goods using electronic methods has been gaining popularity lately. DMCC free Zone was created to provide an efficient infrastructure for international trade. Financial products are distributed by organizations such as the Dubai Gold Delivery Standard (DGDS) and the Dubai Gold and Commodities Exchange (DGCE).
How to start a Gold Trading Business in Dubai?
Jewelry made of precious metals, made by the hands of skilled craftsmen, are popular among tourists and expatriates. To obtain an official permit to trade gold, you need to choose the right jurisdiction for the company.
Everyone who wants to invest money profitably has the opportunity to start the development of several business projects related to the trade of precious metals in Dubai. However, with the availability of an effective infrastructure, thanks to which all the initiatives of traders are supported, the best way to make money in this sector is to try to implement your projects in the unique economic zone of the DUCK and Gold & Diamond Park.
At the same time, it is important to know that doing business will involve interaction with several centers that help in obtaining trade licenses. There may be several options for getting them.
If an entrepreneur wants to develop his business in the local market, then he should visit one of the major bazaars of the UAE. The best choice in this case will be the DED license.
3 largest centers offering their assistance in obtaining licenses are listed here: Dubai Gold & Diamond Park, Trading License in DMCC or getting a license from DED.
Gold Trading License in DMCC
It’s no secret that trading precious metals has always been considered one of the most profitable ways to invest. Gold prices are stable, and therefore the demand for jewelry is constantly growing. An entrepreneur has the opportunity to register a trading company in the DMCC free trade zone. Operations will be managed from it. To create a company and obtain a license, you need to follow a number of recommendations that are related to two main stages. They will be described below.
Registration & Pre-Approvals
First you need to register a company by submitting documents with its name to the DMCC. A specially designed registration form is considered by DMCC representatives. If the answer is positive, the entrepreneur receives initial approval. Then he should decide which premises will be required for doing business.
According to the requirements and recommendations of DMCC, you can choose different business premises. They can be fully furnished or completely unfurnished. Agreements or contracts signed with the lessee are also provided to the DMCC for obtaining a trade license.
After submitting an office lease agreement, you need to send it to DMCC representatives. With a positive response to the request, the entrepreneur will receive a license to trade in the gold sector. After that, any transactions will be considered legal. This applies not only to the local market, but also to the international one.
Advantages of creating a business in DMCC
Every investor who plans to invest in the purchase of gold and trade precious metals in the DMCC free zone should be aware of the advantages of this type of activity.
The creation of a special economic zone with a particular purpose presupposes the existence of an effective infrastructure. Dubai Gold & Diamond Park is considered an ideal platform for investors who are ready to start developing projects related to gold trading. Entrepreneurs can count on support from government agencies, thanks to which perfect conditions for trade are created.
Benefits of conducting business projects in the DMCC zone:
- taxation free;
- withdrawal of net profit by a non-resident of the UAE outside the country;
- ownership of foreign property;
- ensuring the safety of all participants of business projects;
- unlimited access to all types of operations;
- efficient infrastructure.
Dubai Gold & Diamond Park
Thanks to the authoritative opinion of experts, Dubai Gold & Diamond Park is called a favorable ecosystem that allows it to effectively develop the production of goods and establish retail trade. It is under the administration of the Jebel Ali Free Zone.
What is located in the Free Zone:
- 118 production facilities, each of which was built by special order;
- 350 office premises and small shops, the owners of which are engaged in the production of jewelry made of precious metals using natural stones and their sale.
Steps involved in Obtaining Gold Trading License
According to the current laws, it is impossible to become the owner of a license to trade in precious metals without renting premises for office purposes, production and sales. This is a prerequisite, without the provision of a lease agreement, the license will not be issued to the entrepreneur. The demand for original jewelry made of high-grade gold has always existed. Moreover, the gold products that can be purchased in Dubai are famous for their excellent quality. Someone buys designer products for special occasions, someone is interested in cute options for every day. Therefore, the business in this sector is one of the most profitable.
The growing demand affects the supply. In order to legally import material from other countries, an entrepreneur must have not only a license, but also office space. These requirements are related to each other.
Recommendations for starting a successful business:
- Completion of the design of premises for industrial, office and warehouse needs. Conclusion of a contract with the tenant.
- Making a request for a license. Documents must be submitted to the administration of the Jebel Ali-Friz Free Zone.
- On request, preparation of documents MOA & partnership deeds, NOCs.
- Opening a bank account.
Despite the fact that when applying for a license, an entrepreneur should not face difficulties, he must take into account a number of mandatory requirements. What exactly should be provided:
- A completed form confirming the existence of the name of the company that will be presented as a future trading participant.
- Request form for obtaining a trade permit.
- Copies of documents confirming the identity of all interested persons (owners and shareholders).
- Upon request, other types of information are recorded on tangible media (NOCs, MOAs).
It should be borne in mind that different types of documents permitting trade activities are available for each entrepreneur. Licenses need to be selected depending on a certain type of activity. Among them, it is worth considering:
- permission to conduct trade (retail or wholesale);
- licensing of production;
- license confirming the right to innovation;
- license to provide maintenance services;
- permission to conduct e-commerce.
Advantages of creating a business in Gold & Diamond Park
Benefits of developing business projects in the free zone:
- compliance with international legal guarantees when registering foreign property;
- corporate taxes are low;
- possibility of interaction with the advertising center of the Dubai administrative authority;
- ensuring security;
- availability of production facilities and retail stores in one place;
- skilled workforce.
Dubai Economic Development (DED)
In order to quickly adapt to new business conditions and increase retail space, you need to submit a request for a DED gold Trading License. You will definitely not lose if you decide to start working on the Gold Souk Market in Deira. This place is rightfully considered one of the most profitable for the development of business projects in the gold sector.
The demand for precious metal products is growing not only in the local market. Entrepreneurs successfully export their goods to the Persian Gulf countries and far beyond their borders. The products are of first-class quality and have warranty certificates. This significantly increases the confidence of customers in the products.
Sharjah Airport Free Zone (SAIF Zone)
It should be noted that the SAIF zone is popular among investors who want to issue a trade license. On its territory, there are successfully functioning factories where imported gold is processed. Unique jewelry and other valuable products made of precious metals are made here, the demand for which is only growing over time.
The license greatly simplifies access to the objects of the shopping area. Business processes are simplified as much as possible. Ideal conditions for gold trading: effective infrastructure for development. Import-export processes are regulated by the Customs Department, which operates on the territory of the SAIF zone. The advantageous location near the airport greatly simplifies logistics processes. Investors can freely import and export goods outside the zone.
Benefits of investing in gold trading business in Dubai?
It is important to take the choice of a business project with maximum responsibility, because its unprofitability will cost the investor dearly. Strategies to avoid risks and losses of invested funds will be described below.
Favorable conditions are provided for business development to foreign investors in suitable free zones or on the Dubai mainland Gold Exchange, such as Dubai Gold Souk. On the mainland, entrepreneurs can take advantage of various business benefits. Favorable conditions have been created here for trading gold on the forex market in Dubai.
Advantage from tourism
It is worth considering that the UAE is a popular destination in tourism, a huge number of tourists from different parts of the world come to this country every year. This undoubtedly presents new opportunities for owners of gold jewelry processing and retail companies. This place is famous all over the world for its unique products made of precious metals, and many tourists strive to make an unforgettable gift for themselves or their loved ones. An unusual attraction of the city, which is definitely worth visiting at least once in your life, is the Gold Market. Here every visitor will be able to find jewelry according to their preferences. Many creative designers are involved in the development of online commerce, which brings a good income.
VAT on gold trading
The UAE government has contributed to the creation of favorable conditions for owners to do business in the gold sector. The wealth of the market is difficult to describe in words. People come here from different parts of the world to buy gold jewelry for themselves or as a gift to loved ones. The prices of the products are relatively low compared to their analogues, which can be bought in other countries.
According to mechanisms on the territory of free zones, registered manufacturers or owners of gold business in Dubai do not charge fees from other dealers who plan to resell or produce gold products. As a result, buyers are charged at a very low rate (5% of the purchase price).
The demand for high-quality gold never drops. Products can always be bought and sold, regardless of where in the world their owner is located. Therefore, transactions for the sale of precious metal carry little risk. It is important for the buyer to remember that over time, the price of gold can both fall and grow significantly. Rare unique products become more expensive after decades.